Transcontinental Railroad

Capitalization

Building the Transcontinental Railroad presented both physical and monetary challenges. Even with huge government subsidies, the railroad companies had to raise millions of dollars to cover construction costs. They sold stocks and bonds, borrowed money, and received revenue from operations. Directors skimmed millions off the construction contracts and became rich. Operating the railroad once it was completed was often less profitable.

Stocks

Since the success of railroads was not guaranteed it was difficult to raise money through stock sales.

Title page of "Report of the Organization and Proceedings of the Union Pacific Railroad Company, 1864.

Bonds

Union Pacific Railroad booklet 'Omaha to the Mountains', Bonds Page.

Union Pacific Railroad booklet on its construction, resources, earnings, and prospects, 1876

UPRR, It construction, resources, earnings, and prospects, 1876

The cost of building the road from Sacramento to the eastern base of the Sierra Nevadas will be, in round numbers, fifteen million six hundred thousand dollars; or at the rate of one hundred thousand dollars per mile. Five millions more will have been expended by the 1st of July, which will cover a very liberal equipment for that length of road and iron enough for one hundred and fifty miles additional. This is a good sum of money, but the Company has been favored by abundant revenues, viz :—
Donation of San Francisco Gold bearing Bonds; $400,000;
U. S. Government Bonds
$7,336,000
First Mortgage Bonds Convertible Bonds $7,336,000
California State Aid Bonds; $1,500,000
Subscriptions to Capital stock (mostly in Gold) $3,000,000;
Public Land, 2,000,000 acres $3,000,000
Net earnings after interest payments (gold 1865 and 1866) $708,664.42
Net earnings to July, 1867 $386,818.27
Total resources for 156 miles; $25,166,482 69

railroads to the pacific ocean. It will be seen that only two of these items bear interest for the payment of which the Company is chargeable. The whole interest liability upon this schedule will be, for the present year, but five hundred and forty-five thousand one hundred and sixty dollars in gold; while its net earnings by a moderate estimate will be three or four times that sum.
The Railroads of the United States, 1868, p 398-399